BKNG Q1 Earnings Call: Diversification and Direct Booking Strength Drive Outperformance

Online travel agency Booking Holdings (NASDAQ: BKNG) announced better-than-expected revenue in Q1 CY2025, with sales up 7.9% year on year to $4.76 billion. Its non-GAAP profit of $24.81 per share was 41.2% above analysts’ consensus estimates.

Is now the time to buy BKNG? Find out in our full research report (it’s free).

StockStory’s Take

Booking Holdings’ first quarter was shaped by solid growth in room nights and continued geographic diversification, with management attributing outperformance to a broad global network that captured shifts in travel demand. CEO Glenn Fogel highlighted the company’s ability to adapt to changing travel patterns, noting, “When travelers choose to alter their destination preferences, our global network of partner suppliers is a valuable asset.” Management also emphasized disciplined expense management and the strategic advancement of initiatives such as expanding alternative accommodations and leveraging AI across platforms.

Looking beyond the quarter, Booking signaled cautious optimism for the remainder of the year, acknowledging ongoing geopolitical and macroeconomic uncertainties. CFO Ewout Steenbergen maintained that demand trends have remained stable but noted the company is widening its full-year guidance range to reflect increased uncertainty. Fogel explained, “We believe our global diversification, substantial liquidity, strong free cash flow, and historical record of executing effectively position us well to navigate potential changes in the environment.”

Key Insights from Management’s Remarks

Booking’s first quarter benefited from a combination of product innovation, platform enhancements, and a diverse supply network that helped buffer regional fluctuations in travel demand. The company’s efforts to expand direct bookings and invest in loyalty programs were notable contributors to improved profitability and customer engagement.

• Geographic Diversification: Booking’s broad international presence helped offset regional slowdowns, particularly a moderation in inbound U.S. travel, as increased activity in other travel corridors—such as Canadians traveling to Mexico—balanced overall growth.
• Alternative Accommodations Growth: The company continued to expand its alternative accommodations segment, with listings reaching 8.1 million and room night growth of 12%, outpacing traditional hotel bookings. Management sees this as a long-term growth lever, especially in periods of softer demand.
• Direct Booking and App Usage: Direct channel bookings and mobile app usage both increased, with the direct mix rising to the mid-60% range and app bookings comprising over half of total room nights. This shift lowered dependency on paid marketing channels and improved customer retention.
• Genius Loyalty Program Expansion: The Genius loyalty program, especially Levels 2 and 3, represented over 30% of active travelers. These higher-tier members showed higher booking frequencies and direct channel usage, supporting recurring revenue and margin expansion.
• AI and Connected Trip Initiatives: Booking advanced its Connected Trip vision, integrating AI-powered features like Smart Filters and property Q&A. The company also launched new AI initiatives, including KAYAK.ai, and partnered with leading tech firms to develop travel-specific AI agents, aiming to simplify and personalize the booking experience.

Drivers of Future Performance

Management expects stable global travel trends to continue in the near term but remains vigilant about potential macroeconomic and geopolitical disruptions. The company’s outlook is anchored in its ability to leverage technology, diversify offerings, and deepen customer loyalty.

• AI Integration and Connected Trip: Management believes expanding AI capabilities and progressing towards a connected, seamless travel experience will be key to driving direct bookings and long-term differentiation.
• Alternative Accommodations Expansion: Continued investment in growing alternative accommodations, particularly in regions outside the U.S., is expected to support room night growth and mitigate regional volatility.
• Marketing Efficiency and Loyalty: Ongoing optimization of marketing spend and further development of the Genius loyalty program are expected to enhance customer retention and support margin expansion, though management cautioned that external factors could still impact consumer demand.

Top Analyst Questions

• Douglas Anmuth (JPMorgan): Asked about the value of travel-specific AI agents and geographic demand shifts. Management highlighted the complementary role of both broad and specialized AI tools, and emphasized that geographic diversification insulates the business from regional slowdowns.
• Mark Mahaney (Evercore ISI): Inquired about the strategy for attractions and the rollout of AI-driven agentic tools. CEO Glenn Fogel explained that attractions are now integral to the Connected Trip vision and that AI tools are still in early stages but progressing steadily.
• Eric Sheridan (Goldman Sachs): Sought details on shifts in growth investments and marketing channel optimization. Management replied that investment priorities remain steady, with ongoing experiments in marketing channels to maximize ROI without major strategic changes.
• Brian Nowak (Morgan Stanley): Questioned the reasoning behind widening full-year guidance ranges. CFO Ewout Steenbergen cited increased uncertainty and the need to accommodate a broader range of potential outcomes, despite stable current trends.
• Lee Horowitz (Deutsche Bank): Asked if U.S. market softness presents share gain opportunities and about direct booking mix. Management stated they will pursue share gains if opportunities arise and that direct mix is expected to keep increasing, aided by AI and loyalty initiatives.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) whether Booking’s AI-enabled Connected Trip offerings drive higher direct booking rates, (2) the continued expansion and traveler adoption of alternative accommodations, and (3) the effectiveness of marketing efficiency improvements and Genius loyalty upgrades in supporting margins. The trajectory of global travel demand and the impact of external uncertainties on consumer behavior will also be key indicators of execution.

Booking currently trades at a forward EV/EBITDA ratio of 18.6×. Is the company at an inflection point that warrants a buy or sell? See for yourself in our free research report.

Stocks That Trumped Tariffs in 2018

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.